What this line means
Commissions and fees you paid to non-employees for sales or services related to your business. This includes platform fees (Etsy, Amazon, Stripe, PayPal, Square), referral fees, sales commissions paid to independent agents, and finders’ fees. Do not include commissions paid to employees — those go on line 26 (wages).
Does this apply to you?
- You sell on platforms that charge seller fees (Etsy, Amazon, eBay, Shopify)
- You use payment processors that charge transaction fees (Stripe, Square, PayPal)
- You pay referral fees or commissions to independent contractors who bring you business
- You pay broker fees or agent commissions related to your business operations
Easy to overlook
Payment processing fees are deductible here Every time Stripe takes 2.9% + 30 cents, or PayPal takes its cut, or Square charges a swipe fee, that is a deductible business expense. These fees add up fast — a business processing $100,000 in credit card sales pays $3,000+ in processing fees. Many sole proprietors never track these separately because the money is deducted before it hits their bank account. 1 General filing pattern — missed platform fee deductions
Platform fees already subtracted from 1099-K payouts If your 1099-K shows net payouts (after platform fees), and you report that net number on line 1, do not also deduct the platform fees here — you would be double-counting. Either report gross sales on line 1 and deduct fees on line 10, or report net payouts on line 1 and skip line 10. Pick one approach and be consistent. 2 IRS Schedule C instructions — Line 10
Watch out for this
Forgetting to deduct platform and payment processing fees because they are automatically subtracted from payouts. If you report gross revenue on line 1 (which the IRS prefers because it matches your 1099-K), you must capture these fees as a deduction somewhere. Line 10 is the correct place.
Footnotes
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IRS Schedule C (Form 1040) Instructions. See also IRS Publication 17, Your Federal Income Tax. https://www.irs.gov/pub/irs-pdf/p17.pdf ↩
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IRS Schedule C (Form 1040) Instructions, Line 10. https://www.irs.gov/instructions/i1040sc ↩